A bipartisan group of senators has taken aim at the largest US banks, introducing legislation to bring back a version of the 1930s Depression-era Glass-Steagall Act, which separated traditional banking from riskier services and was repealed in 1999.

The move, led by Elizabeth Warren, a Massachusetts Democrat, and John McCain, the veteran Republican from Arizona, marks the latest congressional attack on US financial institutions accused of being “too big to fail” and of exposing taxpayers to the risk of government bailouts.

As the FT also say, the bill has helped put Wall Street banks on the defensive in Washington, despite the fact that it is unlikely to advance in this Congress. I suspect that’s true, but it’s not the point. The point is to make sure the possibility of change is debated. And it is curious to note the defence:

Tony Fratto, a US Treasury official under former president George W Bush and managing partner at Hamilton Place Strategies consultancy, said the legislation announced on Thursday was “hard to take seriously”. He added: “Even trying to implement this proposal would do damage to our ability to compete in a global economy.”

As ever, it is claimed that competition in a global economy is the reason for continuing abuse at cost to ordinary people. But those ordinary people know that global economy is not benefiting them on this issue and they also know that competition in it is rigged entirely in favour of bankers, and not in favour of anyone else becaise the way the so called market operates bankers can’t fail but win even if everyone lese loses. That’s not competition at all.

It’s good to see that even people like McCain – a man for whom I have little time – can see this.

Probably got his car shock-absorber analogy from a poster on the wall of a Quick-Fit-Euro waiting room .

I’m not sure whether he is the clown or whether I’m the clown for giving him the benefit of the doubt that it was due to his incompetence rather than being a disingenuous Global Finance flunky . You any view on this Richard ?

At 11:39 the inteviewer equates investment banking and casino banking as being the same thing which they shouldn’t be . Investment banks should be making their money from fees on socially useful services , not proprietary trading .

yes, it is painful watching Turner ‘confess’ with his expensive suit and buffant hair grin while he talks about issues that wreck lives. Typical case of someone converting to a new belief system when they have benefited from the old and there is no risk attached to it. People like him proved themselves economically illiterate when real insight was needed. He’s a bit like those Afghan tribes people who change their allegiance to a warlord depending on which one is dominant.

Richard, even though he’s a Republican, perhaps McCain can see the contradiction between a party that likes to parrot the sacred right wing mantra of responsibility but at the same time slavishly supports the financial sector whose total lack of any responsibility resulted in it being bailed out by the rest of society, which that same financial sector then demands pay for the cost of this by massive cuts in spending.

Perhaps he can even see the appalling injustice of this? If so, perhaps we should invite him over to give members of this government a little lecture on ethics?

At cabinet level in the current and previous government I don’t think it is down to ethics so much as a lack of understanding about what really produces prosperity .

Perhaps they look at Germany , a country driven by engineering and manufacturing and think it’s “not for us” back here in the UK .

For a start I think it would be beneficial if Parliament relocated out of London .

Old Gordon was happy to let the banks operate as tax collectors collecting a sovereign for the Govt and keeping a sovereign themselves and really seemed to think this could fund his programs .

MP’s were voting in favour of bills which were not properly costed – this was a dereliction of duty too and ethically unacceptable .

At the back bench level I think this happens partly because too many MP’s lack even basic numeracy skills and too many are just lobby fodder .

With regards to America , the UK needs not only to transfer the technology which enabled huge volumes of natural gas to be produced from shale but more importantly to import the culture which made it a success :-
– persistence rather than a readiness to consign things people struggle to understand to the “too difficult bin” * .
– an entrepreneurial middle class i.e. in the UK the height of a middle-class parents ambition is for their child to get a “good job” for a large company which their friends have heard of . In America it’s that their kids will start a company , often local . **

* The UK Govt spent 18 months trying to strangle shale at birth . We have Cuadrilla to thank for torpedoing the UK establishments unworkable energy policy by throwing reality in the works . The left need to get off the fence or move over to the right side of history on shale and stop suggesting that shale,renewables and insulation are mututally exclusive options when the UK needs them all .

** In the UK the working class is more entrepreneurial than the middle class , white-van-man being a prominent example of this .

Given the environmental problems associated with sghale gas (it is still a fossil fuel) I’m not sure that it’s the answer to our energy problems, and the US has gone for it in a big way because, despite all the financial and intellectual resources they can still command, they won’t shake their addiction to ‘cheap’ energy.

That being said, your comments about Parliament seem depressingly true. And as for Parliament needing to relocate, that’s a thought that’s occurring to me more and more. We have a financial crisis caused by London based banks and reinforced by a London based national government that the whole of the rest of the country is being made to pay for. Given that the cuts are hurting the north of England more than the south, who could blame people up north for wanting to be free of a London based political/business elite that’s done nothing for the north? I think people in the north of England are going to look at the Scots with envy when (as I think will happen) they vote for independence.

And you’re spot on about Germany; I’ve long thought their political and business set up is one we should emulate. If that means getting Parliament out of the SE of England and away fropm the obnoxious influence of the City, so be it.

The party leaders seem to be in part a product of their upbringing , two out of three within London , the other with a stockbroker as a father . It’s all many of them have ever known .

We are going to be using fossil fuels for a long time , for industrial and domestic heating and transportation even once most electricity is generated by other means . The decision is whether we produce our own or import other peoples .

For the sake of disclosure I have shares in companies which are trying to transfer the technology from the USA to the rest of the world including the UK in my ISA .

Shale may seem low-tech but it’s actually high-tech particularly the software and computing power which interprets micro-seismic data in near-real-time as the fracture stimulation is proceeding to produce a graphical depiction of fracture extents on a screen .

There are likely to be spin offs from this technology too .

I have a problem with the UK importing hydrocarbons from the new provinces opening up in East Africa and West Africa . That continent needs to keep as much of what is found as it can for domestic use where it can do some good . I hope they copy Norway rather than UK and have something to show for it long term .

Sickoftaxdodgers – this is more evidence that the left/right paradigm needs exploding – there are many on the right in America that can see global capital as anti-democratic we all need to support each other on this. Germany is always cited as the example of best practice. They don’t have the appalling history of terrible management/union conflicy we have due to the post war ‘mitbestimung’ or consultation processes between management and workforce and unlike here, manufacturing wasn’t thrown out of the window which has turned this country into a museum/service industry/moneylandering hub.

Simon, I’d say Germany has a political system that works a lot better than ours, full stop! As I understand it, the voting system is part FPTP, part PR, and they have had various shades of Social democracy for decades, which has included a substantial Green influence. Their banking system seems set up to work with companies in the real economy to produce long term prosperity, and the economy isn’t dominated by a hopelessly short termist financial sector that is part of, and promotes, ‘sweat the assets’ anti-regulation, anti-worker capitalism.

I’m sure the German system isn’t perfect, and I’m sure Germans themselves moan about their politicians as we do, but in comparison to us……

Perhaps you should try to view the world / UK a little bit more holistically if you think shale gas is the answer to our problems. I for one do not view the potential desecration of large swathes of countryside to facilitate fracking and all the transport and infrastructure that will be required, not to mention the pollution of ground water and the cancerogenic chemicals as a solution.

We will need to feed the population – although globalisation and supermarkets are doing their best to decimate our farming industry.

Natural gas from shale and tight-oil gives the world a soft landing and buys us some time so prices don’t abruptly rise like some peak oil scenario’s were predicting .

Renewables are decades off being able to address our electricity generation needs let alone domestic and industrial process heat and transportation needs .

Given the alternatives of coal and nuclear , natural gas looks like a large part of the answer for the next few decades – with insulation and other energy consumption reduction methods another . The only way of getting enough natural gas is fraccing shale and tight rock .

Exploration wells are generally vertical and will be located above the vertical sequences of rock which need to be tested and will cause disruption on local roads .

Production shale wells use of horizontal laterals up to 2 miles long from multi-well pads which keeps the surface footprint to a minimum (essentially keyhole surgery) , enables well pads and other surface structures to be located near major road/rail yet to access the actual gas resources from a distance .

Natural gas is a feedstock for the fertiliser industry . There are plenty of other more water intensive industries including golf courses .

Oil field chemicals in Europe are governed by REACH regulations and this covers not only frac additives but drilling fluids . What is being pumped down need not be an issue . What requires special attention is treatment and disposal of formation fluid which is already down there which will be returned to the surface .

Treatment of formation fluid already happens on a major scale for the hundreds of existing onshore wells in the UK .

The chance of ground water contamination by frac fluids happening even given a large number of wells , properly constructed well with a full-length properly formulated full length cement sheaf is low . If it happened or methane contamination happened , monitoring of samples from test-wells would detect it quickly .

There is a higher chance of pollution of ground water from surface activities of many industries – including farming .

The fear of “potential desecration of large swathes of countryside” or perceived threat to agriculture seems unduly pessimistic .

All this is hypothetical until we know whether (and where) the hydrocarbons can be recovered on a scale to make it viable – and the only way to do that is to resume drilling and fraccing .

It’s time to abandon Ricardo’s theory of comparative advantage (which I never accepted even as an undergrad).

Keynes could see clearly that the only comparative advantage is in natural resources, including agriculture. (It’s probably true that Keynesian policies cannot succeed without the capital controls which he did not envisage would vanish.)

It’s this myth which persuaded the last Labour government to build the economy round the ‘comparative advantage’ of the City, with it’s ability to do what better than others (?).